THG, TrackNet Have Differing Views

The Thoroughbred Horsemen’s Group claims it wants advance deposit wagering entities to pay a fairer share into purse coffers, but those on the other side of the negotiating table claim the math simply doesn’t add up.

The THG, a coalition of 18 horsemen’s organizations formed late last year, has made headlines in recent days for its stand on contract negotiations at Lone Star Park and Calder Race Course, where it is demanding a one-third share of the takeout realized from ADW wagers on a nationwide level.

The group, which gained the support of the Thoroughbred Owners and Breeders Association April 15, is also involved with Kentucky horsemen in the negotiations for the upcoming Churchill Downs meet, which is highlighted by the May 3 Kentucky Derby Presented by Yum! Brands (gr. I).

“We are for open distribution of all races to all ADW outlets,” THG president Bob Reeves said in an April 15 telephone interview. “We would like customers of TVG, Youbet, Twinspires, and XpressBet to have access to any races. We’re for open distribution for all of those, and for fair contribution to purses.”

But TrackNet Media Group, which represents the interests of Lone Star, Calder, and Churchill Downs, as well as related ADW entities XpressBet.com and Twinspires.com, said the THG’s nationwide approach isn’t feasible because of varying state laws regulating wagering.

TrackNet president Scott Daruty claims if the content company gave Texas horsemen what they are seeking for the Lone Star signal, ADWs would have to be charged a fee in the neighborhood of 18% – which is nearly six times the industry’s historical average of about 3.5%.

Daruty said Texas Racing Commission rules mandate that exactly 37% of the net yield from exported wagers must be contributed to purses at the state’s tracks, and to satisfy both that mandatory payout and the one-third demand of THG, the higher fee structure would have to be charged.

“I make the point about Texas to show how difficult it is to come up with a ‘one-size-fits-all’ model,” Daruty said. “Even if we set aside Texas, and look at a state where there is a more traditional 50-50 split (between horsemen and the track), that would require a 14% fee. Those aren’t numbers, in my opinion, that an account wagering company can operate its business on. It’s purely a mathematical fact.”

TVG general manager David Nathanson said he is “keeping an eye” on the situation developing between the THG and TrackNet, but declined to comment further. Youbet.com officials didn’t return a call seeking comment.

Reeves said he isn’t familiar with the Texas statutes Daruty cites, but claimed the THG is willing to “overlay” its concepts within guidelines of state regulations.

“We are willing to sit down with any account wagering company, state by state, and phase in what we are trying to do,” he said. “We are not trying to put anyone out of business, and not trying to hurt any of the racetracks. In fact, they can use what we are doing to get more revenue from account wagering.”

In an April 15 news release, the THG claims account wagering currently provides up to 80% less revenue per wagering dollar to support purses and live racing than do on-track or inter-track wagering.

“By the racetracks going into the account wagering, they have found a way around the 50-50 split,” Reeves said. “We are letting those entities negotiate among themselves with our money. Our due diligence says we have to get involved.”

Daruty believes TrackNet Media Group, which is a year-old content consortium for tracks owned by Magna Entertainment Corp. and Churchill Downs Inc., is currently standing alone in the cross-hairs of the THG. He claims the THG hasn’t made its presence known for meets such as Evangeline Downs, River Downs, Delaware Park, or Keeneland.

“I believe that TrackNet is being singled out at this point; that the horsemen’s strategy is to get TrackNet to concede at this point, and then follow through with the others,” Daruty said. “If this is a nationwide effort, why haven’t they taken action on those tracks?”

Daruty said TrackNet is willing to continue discussions with the THG, but added: “So far, they have been unwilling to listen to anything that is not based on their one-third model.”

Access to the Lone Star meet, which opened April 10, is currently only available to ADW customers of “regional” entities, such as those operated by the New York Racing Association, the New York Off-Track Betting Corp., and others, Daruty said.